As the coronavirus spreads, our economy continues to slump.
The “Trump Bump” is no more, with the Dow Jones Industrial Average and S&P 500 losing about 30 percent in value since peaking in February. At the same time, 3.3 million Americans recently filed for unemployment benefits (a single-week record), as a once-healthy unemployment rate threatens to reach 10 percent for the first time since the Great Recession. It has likely jumped two percentage points in a matter of weeks.
In the midst of so many worrying economic indicators, how do you even focus on one or two? But perhaps the most worrisome is the waning confidence of small businesses.
Once a hallmark of the Trump economy, small business optimism has given way to anxiety. Faced with layoffs and closures, small businesses are more reluctant than ever to invest in business expansion and job creation.
Those still in operation may soon join the ranks of the shuttered. According to a recent Goldman Sachs survey, more than half of all small businesses claim they can’t operate past the next three months. Over 95 percent of small business owners say they have been affected by the pandemic, with three-quarters reporting fewer sales.
Given the outsized impact of small business, that’s a big deal—a really big deal. Remember: America is home to more than 30 million small businesses, which account for 99.9 percent of all businesses in the United States. Small business also employs nearly 60 million workers—half of the private-sector workforce.
When small business owners suffer, their employees and those who depend on them are sure to follow suit. In our economic system, employers and employees are inextricably linked—you can’t hurt one without hurting the other.
The positive impact of small business is so outsized that elected officials are now scrambling to help. Capitol Hill’s $2 trillion stimulus package includes more than $370 billion in government-backed bank loans for small businesses, aiming to increase liquidity to help their owners pay for basic expenses—from employee wages to rent and utilities. Small businesses that have already laid off workers, meanwhile, can qualify for payroll loan forgiveness.
In recent weeks, we’ve been bombarded with dozens of headlines pertaining to small business, namely their short- and long-term viability during the pandemic. “Keeping small businesses afloat” has become a rallying cry, as have becoming a small business patron and buying local.
And that’s a good thing. Now more than ever, American consumers should keep their favorite small businesses in mind. Using our purchasing power to lend a helping hand can at least slow the bleeding, if not stop it.
But this begs the question: Why do we need the coronavirus to appreciate small business? Why do we need a global pandemic motivating us to “buy local”? Shouldn’t we support the entrepreneur in good times and bad, whenever possible?
Under normal circumstances, our elected officials are often so preoccupied with scoring political points that they take the contributions of small business for granted. Immigration debates are more polarizing. Arguments over abortion and transgender bathroom laws generate more headlines. Hot-button issues are hot-button for a reason—they get people talking, clicking, and sharing.
All the while, entrepreneurs are working diligently to start a business, see it grow, and sustain that growth over the long haul. One in five fail within their first year. About 50 percent shut down within five.
Yet those who succeed are what make America, America. They are your favorite cafe. They are your specialty grocery store. They tailor your suits with a personal touch. Small businesses not only line the Main Streets of America, but also bring them to life through the variety of their wares.
This is not to discount the impact of large corporations (after all, they all began as small businesses). But the endearment of small business is one of a kind. That feeling of frequenting a mom-and-pop diner or seeing an entrepreneur go from rags to riches is the American Dream, personified.
Alas, when the dust of the coronavirus settles, the prosperity or plight of small business will recede from the headlines. Our elected officials will return to “business as usual,” discussing and debating the hot-button issue of the day, with the mainstream news cycle right behind them. Gone will be any concern over small business tax reform or regulatory relief.
We, the people, are not blameless either. Only half of Millennials are willing to pay more to support a small business. Gen Xers are even more reluctant, with fewer than 40 percent open to paying a premium. “Buy local” is a powerful rallying cry only if it’s backed up with cash.
Post-pandemic, this may change. Hopefully it does. We can all do more to support entrepreneurs who are risking their financial security for the sake of innovation—and creating millions of jobs in the process. They need us, now and always.
If there is a silver lining to the coronavirus, it’s that small business is finally getting the respect it deserves.
Catalyst articles by Luka Ladan